Issues to Consider in Real Estate Transactions Involving Trusts and Estates
| Jurisdiction | Georgia,United States |
| Citation | Vol. 27 No. 4 Pg. 0016 |
| Pages | 0016 |
| Publication year | 2022 |
BY KATHRYN BALDWIN HECKER, MATTHEW J. HIGGINS AND MICHAEL L. VAN CISE
This article discusses Georgia trust and probate law and related federal tax law that real estate lawyers should consider when evaluating transactions involving a trust or a decedent’s estate.
The seller’s authority to convey is a threshold question in any real estate transaction. Real estate transactions in which a trust or the estate of a deceased individual is the seller present unique issues relating to the seller’s authority to convey and potential liens and encumbrances that affect marketability of title to the property. These issues present traps for real estate attorneys who are unaware of the interplay between trust and probate law and real estate conveyances.
This article discusses Georgia trust and probate law and related federal tax law that real estate lawyers should consider when evaluating transactions involving a trust or a decedent’s estate. Several provisions of Georgia trust and probate law and related federal tax law can affect a seller’s authority to convey real estate and the quality of the seller’s title. As such, real estate lawyers should be aware of certain sections of the Georgia Code and Internal Revenue Code that may present issues in a transaction involving a trust or estate seller.
This article first gives an overview of the Georgia Probate Code, which provides procedures for probate, intestate succession and ancillary probate in Georgia. It then highlights certain provisions of Georgia law and federal tax law relating to trusts and estates that real estate practitioners will likely consider relevant, given the potential of these laws to cause issues in the context of a real estate transaction.
Overview of the Georgia ProbateCode
A person can die either with or without a valid will. A decedent who died with a valid will [1] is said to have died testate. A decedent who died without a valid will is said to have died intestate.[2] Different chapters of the Probate Code govern the estates of testate and intestate decedents. In a testate estate, the person appointed by the Probate Court to administer the estate is called the executor.[3] In an intestate estate in Georgia, the person appointed is called the administrator. Georgia law refers to administrators, executors and other possible fiduciaries of an estate as “personal representatives.”[4]
Testate Decedents
If a person dies with a will, the will must be probated (from the Latin word for “proven”) before the executor is granted the power to carry out the terms of the will. Probate is a process to determine that the will satisfies the requirements of Georgia law. Georgia has two methods to probate a will: solemn form and common form.[5] Both methods are described in detail below. Solemn form is by far the most routinely used, as common form provides little protection to the executor and therefore carries with it significant limitations. However, there are occasions where common form may be used or when both may be used. If presented with common form letters testamentary as evidence of an executor’s authority in a real estate transaction, one should exercise particular caution. Although there may be protection for bona fide purchasers without notice,[6] a party who knows the executor only probated the will in common form is probably on notice that the executor has limited authority.
Sections 53-5-20 through 53-5-22 of the Georgia Code set forth the procedure to probate a will in solemn form. Probate in solemn form is conclusive upon all parties notified and upon all beneficiaries under the will who are represented by the executor.[7] In certain circumstances, such as when another will has been offered for probate, others must be given notice of probate in solemn form.[8] Further, solemn form probate is conclusive even as to the decedent’s heirs who are not effectively served with notice “as if probate had been in common form,”[9] which is generally four years after the court admits the will to probate. Solemn form probate is conclusive to all others six months from the date the order admitting the will to probate in solemn form is entered by the court.[10]
Typically, the named executor will offer the will for probate in solemn form. A will is proven in solemn form if, after the notice described below, the witnesses testify as to the validity “of their signatures and that of the testator.”[11] If no caveat (challenge to the will) is filed, then the testimony of only one witness is needed.[12] This testimony is provided via written interrogatories or a self-proving affidavit.[13] If the will is self-proved pursuant to § 53-4-24 of the Georgia Code, no additional testimony is needed.[14] Section 53-5-21(b) of the Georgia Code de scribes the requirements of the petition to probate in solemn form. The Georgia Probate Courts have issued a standard form petition that is generally used.[15]
Georgia law refers to administrators, executors and other possible fiduciaries of an estate as “personal representatives.”
Probate in solemn form requires notice to all heirs of the decedent.[16] Section 53-2-1 of the Georgia Code sets out the rules specifying the identity of a decedent’s heirs. The heirs may both (i) acknowledge notice and (ii) assent to probate, such that the heirs do not have to be notified separately. This acknowledgment and assent may be accomplished by way of Georgia’s standard form.[17] Additionally, if there is any other purported will of the decedent for which probate proceedings are pending in Georgia, then notice shall also be given to the beneficiaries and the propounder of the other purported will.[18]
Sections 53-5-16 through 53-5-19 of the Georgia Code set forth the procedure to probate a will in common form. Probate in common form becomes conclusive upon all parties in interest [19] four years from the time of probate.[20] Prior to the expiration of the four year period, however, probate of a will in common form “is not conclusive upon anyone interested in the estate adversely to the will.” [21] Additionally, if probate in common form is set aside, the Court’s appointment of the executor does “not protect the executor in any acts beyond the executor’s normal duties of collecting and preserving assets of the estate and paying the debts of the estate.” [22] However, bona fide purchasers “without notice under legally made sales from the executor will be protected.”[23]
Unlike solemn form probate, a will may be proved in common form upon the testimony of a single witness and without notice to anyone.[24] Georgia also has a standard form petition for common form probate.[25] Because of the limitations of common form probate, some Georgia courts will require an explanation or assurances that a solemn form probate will be filed prior to accepting a common form probate petition.
Intestate Decedents
A person dies intestate if he or she dies without a will or with a will that is deemed invalid.[26] It is also possible for a decedent to have a valid will that fails to dispose of all of the decedent’s property, in which case the property addressed in the will passes under the will and any other property passes by intestacy.[27] The disposition of an intestate decedent’s estate (and any property not effectively disposed of under the decedent’s valid will) is prescribed by § 53-2-1(c) of the Georgia Code.
The disposition of an intestate estate is overseen by an administrator. Generally, any interested party may file a Petition for Letters of Administration and seek to be named administrator.[28] Georgia provides a standard form for this purpose.[29] The rules regarding such petitions are governed by §§ 53-6-20 through 53-6- 24 of the Georgia Code. As with solemn form probate, all heirs of the decedent must be notified.[30]
The administrator may be unanimously selected by all heirs of the decedent. [31] If no such unanimous selection is made, the probate court will appoint the administrator that such court deems will best serve the interests of the estate, considering the following order of preferences: (1) the surviving spouse; (2) one or more other heirs of the decedent or the person selected by the majority in interest of them; (3) any other eligible person; (4) any creditor of the estate or (5) the county administrator.[32]
Under certain circumstances, Georgia law provides that no administration of an estate is necessary.[33] Because the circumstances under which a petition for no administration necessary is available are quite limited, a petition for no administration necessary is rarely available. In order for the court to grant such a petition, the petition must provide that “(i) the estate owes no debts or there are known debts and all creditors have consented or will be served” and “(ii) the heirs have agreed upon a division of the estate amongst themselves.”[34] If the court grants the order, the court must file a certified copy of the order in each county in which the decedent owned real property, to be recorded in the deed records of the county.[35]
Ancillary Probate
Non-domiciliaries with a probate estate outside of Georgia who own property in Georgia may be subject to ancillary probate in Georgia. Ancillary probate is governed by Article 5 of Chapter 5 of Title 53 of the Georgia Code. A foreign will or an out-of-state will duly admitted to probate or established under the laws of the domiciliary jurisdiction may be admitted to ancillary probate in solemn form so long as no caveat to the will is pending in a Georgia court.[36]
Georgia law also has a concept of muniments of title for non-domiciliary testate decedents, which permits ancillary probate to be avoided in certain circumstances. [37] A will is admitted into evidence in Georgia as...
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